If pump prices again reached painful levels, most Americans say they would use a different form of transportation, or just drive less. Only 20% of consumers say they would switch to a smaller, more fuel-efficient or electric car.

Gas prices dropped in time for the holiday season, with the South and Midwest seeing prices as low as $2.28 to $2.52 per gallon last week. But as a decade-high 54 million Americans hit the road travelling 50 miles or more for their Thanksgiving plans, it’s worth pondering our options if the country were again hit with much higher oil prices.

One of the questions we ask in the U-M Energy Survey is about how Americans would change their travel choices if they felt really pinched by gasoline prices. Using nationally-representative data from the past five years, including periods when pump prices were much higher than they have been recently, here’s what we found.

The most frequent response, given by 46% of American consumers, was that they would use a different form of transportation to get around. That could include buses, trains or other forms of public transportation as well as biking or walking. The number two choice was combining trips or driving less, the answer given by 36% of consumers.

Notably, only 20% said they would drive a more fuel-efficient vehicle, such as a smaller car, an electric vehicle (EV), or even a motorcycle, moped or the like. This figure stands in stark contrast to the high levels of publicity around efforts to rapidly shift mass-market consumers to alternative powertrain technologies.

Source: University of Michigan Energy Survey data through Summer 2018

Early this year we added a specific option for respondents to denote whether they’d use a ride-hailing service such as Uber or Lyft, or what is termed “mobility as a service,” if gasoline became too costly. Only 2% of consumers said they would turn to these options, or use home delivery alternatives (such as ordering things online) or even ditch their cars altogether if gasoline became too expensive.

While most Americans likely won’t be abandoning their personal cars and hailing a ride-for-hire to get to where they need to go even if pump prices spike again, the use of such services is growing among many millennials, who seem happy to ditch car ownership and find other ways to get around. Moreover, ordering everyday goods from Amazon and using other home delivery options are increasingly popular. These services clearly offer value to consumers due to their convenience. Nevertheless, our survey results suggest that, at least so far, few consumers say they would turn to new mobility services if fuel prices began to pinch.

These survey responses are broadly consistent with economic studies of gasoline prices and consumer behavior showing that higher fuel costs result in both decreased driving and increased fuel economy. This signal of expected behavior change, or elasticity to fuel price, is why a carbon tax or a cap-and-trade program that covers the transportation sector is one way that policy makers could move the needle on alleviating transportation emissions.

Regional differences in expected travel behavior changes

Gasoline prices can vary considerably state-to-state. Likewise, some regions have more public transit available or higher presence of shared mobility services than others. Using the same pooled U-M Energy Survey data, the graph below shows consumers’ top three responses broken out by census division, with all central U.S. regions combined given the similarity in their responses. We find some significant differences across the country in how consumers expect they would change their travel behavior if faced with too much pain at the pump.

Source: University of Michigan Energy Survey data through Summer 2018

Roughly 55% of Pacific Coast (California, Oregon,Washington) residents said they would start walking, biking or using public transit more. Interestingly, consumers located in Mountain region states were next most likely to give such a response. Another obvious way to mitigate high fuel costs is to just drive fewer miles in one’s own vehicle, and regions varied notably on the extent to which consumers said they’d likely drive less if fuel become more difficult to afford. Residents in central region states (Dakotas and the Midwest down to Texas through Alabama) were least likely to say they would switch to different modes of transportation while being most likely to say they would respond by driving less.

One transportation alternative of interest is switching to a more efficient, smaller or electric vehicle. New England and Pacific consumers were the most willing to make such a choice. This heightened willingness could reflect greater awareness of such options in these regions, where a number of states have programs to promote EVs and build networks of charging stations. Moreover, the denser populations in coastal areas are better matched well for battery ranges. On the other hand, residents in the Mid-Atlantic states (NJ, NY, PA) were least likely to say they would use a smaller, more fuel-efficient or electric vehicle. Less surprisingly, a low level of interest in such options was found in the central states, which generally have seen less promotion of alternative vehicles and supporting infrastructure, and where consumers may feel a need to have more highly capable vehicles and be able to drive long distances.

American travel behavior is in flux as new options emerge and transportation becomes part of the internet of things. Lyft is rumored to pursue an IPO next year while autonomous vehicles are eyeing center stage. How Americans make these choices down the road will have significant implications for transportation sector greenhouse gas emissions. And if higher prices return while new mobility alternatives become more available and accepted, we may see the acceleration of a new era in transportation that, in the minds of most consumers, has barely begun to unfold.

As the saying goes, the more things change, the more things stay the same.

Both are certainly the case when it comes to the University of Michigan Energy Survey’s latest data from summer 2018. We found last November that while consumers were less concerned about energy affordability, they were increasingly concerned about the impact that energy use has on the environment. That concern is now at a five-year record high.

Energy-related concerns

These latest results continue the trend of the growing degree to which Americans worry about how energy use affects environmental conditions including air quality, water quality, global warming and personal health. As shown in the adjoining chart, the level of environmental concern has reached a five-year high. It also reveals a notable contrast between consumer environmental concerns about energy relative to their concerns about whether energy is reliable and affordable.

Nationally representative, the U-M Energy Survey has tracked U.S. consumers’ attitudes about energy impacts and related affordability, reliability, and environmental concerns since the fall of 2013. Survey questions are administered each quarter, tacked onto the end of the Surveys of Consumers, or “SCA”, as a rider. The SCA is renowned for its consumer sentiment index. (See our Methodology page for details and links to the exact question wording.)

Source: University of Michigan Energy Survey data through the most recent quarter (Summer 2018)

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Although the recent rise in pump prices has dampened views on the affordability of gasoline, Americans remain generally content with what they pay for home energy. Our latest analysis, using the Spring (April) 2018 data from the U-M Energy Survey, yields a home energy affordability index of 126 (±10). Although the previous quarter (Winter 2018) saw a nominal dip in this measured of perceived affordability, this latest value remains in line with what the index has been for some time now. In short, consumers are on average comfortable with what they pay to heat their homes and run the appliances, lights, electronics and other energy-consuming devices they use in their everyday lives.

As seen in the chart below, which compares the Energy Survey’s affordability metric for home energy with that for gasoline, the Spring 2018 value is quite close to the long-term average index of 125. That means that monthly energy bills would have to rise by 125% — that is, more than double — before average consumers feel that they would have to make some changes in their day-to-day lives because of home energy costs.

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When we look at what consumers are telling us about various aspects of energy use over time, we sometimes find little trend in the responses. That’s the case for how Americans feel about the reliability of the energy they use in their everyday lives, for example.

One of our Energy Survey questions is, “Considering all sources of energy you usually use in everyday life, how reliable would you say they are — not at all reliable, slightly reliable, moderately reliable, or very reliable?” A prior post on the topic described how answers varied according to income; no surprise, lower income consumers found energy to be less reliable than higher income consumers found it to be. But as a chart in that post shows, consumers’ average views on the topic have changed very little over time. American’s feel that energy is quite reliable overall, and their overall perceptions of reliability are about the same now as when we launched the survey in Fall 2013.

Nevertheless, we do see a lot of variability in the responses from quarter-to-quarter. That made us ask whether there might be a seasonal pattern in the how consumers view reliability. In fact, statistical tests do reveal that a seasonality effect is significant.

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The reliability of the energy used in everyday life is central to Americans’ feelings of security in their homes and daily activities. The continuous improvements in the infrastructure that supplies energy — whether power lines for electricity or pipelines for natural gas and motor fuels — along with the many, largely unseen systems that make these energy networks work — have made reliability ever less of an issue to the average consumer.

It’s not very often, then, that we have to use candles or flashlights because the electricity is out. Americans do experience occasional power outages and sometimes major storms knock out power for numerous homes in an affected area. But overall, as our survey indicates, the vast majority of Americans find that energy is reliable.

Nevertheless, when the issue of reliability is examined in more depth, we discover that some groups of consumers feel that energy is less reliable than other groups. The specific question we ask is this:

Considering all sources of energy you usually use in everyday life, how reliable would you say they are — not at all reliable, slightly reliable, moderately reliable, or very reliable?

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American consumers have been feeling fairly comfortable in general about what they pay for energy over the past year and a half. Gasoline prices averaged $2.50 per gallon until a recent uptick to $2.62 per gallon during October, the month of our most recent energy survey. Nevertheless, consumers’ feelings about their fuel costs held steady, with the latest gasoline affordability index of 100 statistically unchanged from the previous quarter. That means that the price would have to double before the average American felt serious pain at the pump. For home energy bills, the most recent affordability index of 151 differs little from the prior two quarters, remaining up by roughly 30 points compared to last fall and winter. Americans therefore report a ongoing high level of comfort with their recent household energy costs even though the national average Consumer Price Index (CPI) for Energy was up by 9% compared to its summer level. Continue Reading

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Over the past year, the degree of concern that American consumers express about the effect of energy on the environment has increased even as their concern about what they have to pay for energy has decreased. That’s the clear picture that emerges in the latest data from the University of Michigan Energy Survey, which has tracked U.S. consumers’ concerns about the affordability, reliability and environmental impact of energy over the past four years. As seen in this chart, 65 percent of survey respondents say that they personally worry at least a fair amount about how energy use affects the environment. That’s roughly 20 percentage points higher than the number who express that degree of concern about the affordability of energy. (See our questionnaire for the exact questions asked and their sequence in the survey.) As it has since the start of the U-M Energy Survey, concern about energy reliability is much lower, with an average of 30 percent of respondents expressing at least a fair amount of concern about whether they will reliably have electricity, heat or fuel.

Concern about the environment edged out concern about affordability even from the start of the U-M Energy Survey in fall 2013. Gasoline prices were much higher then, but environmental worries became statistically greater than concern about energy affordability even before oil prices fell in late 2014. Since then the gap between environmental concern and concern about energy costs has widened, particularly over the past year and a half (the most recent six quarterly surveys, from April 2016 through July 2017). Our next survey, taken over the month of October, is just wrapping up, but once we analyze the new data, we expect the gap between environmental and cost concerns to remain wide.

A closer look at consumer feelings about energy costs can be seen in the affordability index values, which we track separately for gasoline prices and home energy bills. The next chart shows these indices over the past four years; here, a higher index means that consumers fine energy to be more affordable, which generally correlates with a lesser degree of concern about energy costs. An affordability index of 100 means that an energy cost would have to go up by 100 percent relative to what it was when the survey was taken. Comparing this chart to the first one, it’s clear that the gap between consumers’ degrees of concern about the environment and about energy affordability widened when gasoline prices fell in late 2014, making motor fuel more affordable than it had been over the year before. As detailed in our latest article on gasoline affordability, consumers views on this score have been statistically stable over the past year. Since last summer, the index has hovered around the 100 level, meaning that pump prices would have to double before the average consumer would be motivated to change how they travel. As for home energy bills, consumers have recently found them to be significantly more affordable over the past two quarters.

We also examined how energy-related concerns vary according to a consumer’s household income. One might expect that the extent to which individuals worry about a given energy-related issue would fall as incomes rise. As seen in the next chart, that is certainly the case for concerns about the affordability and reliability of energy. (The error bars represent 95% confidence intervals.) These results are shown on a scale of 0-100, where zero represents the responses of consumers who say that they are not all concerned about an issue and 100 represents those who express a great deal of concern. As for the affordability of energy, consumers in the lower third of the distribution by self-reported household income have a concern level of 58. This metric drops to 47 for middle-income consumers and 41 for upper-income consumers, both below the neutral level of 50 that would reflect consumers being neither very concerned nor unconcerned. Concern about the reliability of energy is lower overall, but shows a similarly clear drop off as household income rises.

Regarding the impact of energy use on the environment, lower income consumers express a somewhat greater degree of concern than others. However, on this issue the trend across income categories is much less pronounced. We see no statistically significant difference between the views of middle and upper income consumers, and the average level of concern is 62 across all income brackets. This finding refutes a view, pushed over the years by anti-regulatory pundits, that the environment is mainly a concern of the “elites,” and that lower and middle-income Americans concerned about costs don’t have the luxury of worrying about the environment. Our data show that lower-income Americans are in fact more concerned than average. In short, Americans express a relatively high level of the concern about how energy affects the environment regardless of their income.

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Even in a debate as heated as the one over global warming, recent proposals by some Republican elders offer hope that cooler heads might one day prevail. They propose a conservative way to address climate risk: harnessing market forces with a carbon tax while refunding dividends to consumers. If such an approach is in the cards, what would it mean for consumers, particularly for buying gasoline without too much pain at the pump?

The University of Michigan Energy Survey asks consumers how much they can afford to pay for energy before the cost becomes so high that they would have to significantly change their lifestyle. The responses are the basis for the affordability indices we publish seasonally, one for home energy and the other for gasoline. Although we don’t ask explicitly about a carbon tax, our data equip us to estimate how many consumers would be pushed outside their comfort zones by a tax of a given magnitude.

Supporters of a carbon tax include (clockwise from upper right): Bill McKibben, George Shultz, Laurene Powell Jobs and James Baker.

The Climate Leadership Council — whose headliners include former GOP cabinet members James A. Baker III, George P. Shultz and Henry M. Paulson, Jr. — has floated a proposal to tax carbon dioxide (CO2) at $40 per ton. A carbon tax of that level translates to an added 36¢ per gallon at the pump.

Motor fuel is less expensive now than it was three years ago; the national average spanning the period of higher prices through the most recent data is $2.80 per gallon. A $40 per ton carbon tax would bump the price to $3.16 per gallon. Based on our survey responses, that price would still be considered affordable by more than 90% of Americans. It is well below the $5.00 per gallon level typical of the average response to our survey question, which asks:

At what price per gallon would gasoline get so high that it becomes unaffordable to you (and your family)?

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After starting 2017 on a low note in their views about the affordability of energy, U.S. consumers were feeling better about the situation by spring. The affordability indices for both gasoline and home energy increased from January to April. Derived from the University of Michigan’s quarterly Energy Survey, each affordability index is scaled so that a value of 100 reflects a consumer belief that energy costs would have to double (that is, go up by 100 percent) before really crimping their household lifestyle.

As of the latest data, taken during the month of April, the gasoline affordability index showed a slight increase to 105. The home energy affordability index rose significantly, reaching 148, its highest level since the U-M Energy Survey began in October 2013, as shown in the chart below.

These gains occurred even though there was no significant change in the Index of Consumer Sentiment, which has remained quite stable since the beginning of the year. That measure of U.S. consumers’ general feelings about the state of the economy is reported monthly by the U-M Surveys of Consumers, to which the Energy Survey is a quarterly add-on.

As seen in the chart, the latest home energy affordability index surpasses all previous quarters by nearly 10 points. April 2017 also marks the first quarter for which the home energy index changed more than the gasoline index. Typically, the home energy index varies over a narrower range (38 points between its lowest and highest recorded values to date) than the gasoline index (which has seen a range of 101 points, due to the volatility of gasoline prices).

January 2017 marks the fourth year of the U-M Energy Survey. In previous years, consumers felt that gasoline was more affordable in January than at other times of the year. But this winter was different: the gasoline affordability index dropped 17 points to 94, the lowest score since July 2015. The decline is only partly explained by gasoline prices themselves, which did see an atypical increase in January this year. In each of the prior three years, gasoline prices fell by an average of $0.50 per gallon from October to January. This time however, the price at the pump actually increased by 9 cents per gallon. Consumers expecting a seasonal reprieve never saw one.

The latest index results also mark the ninth double-digit swing in ten quarters. Despite this volatility in the index, which tracks how consumers feel about affordability, the dollar-level responses to our survey question about “What would the price of gasoline have to reach before it became unaffordable to you?” have not changed much. In other words, the ups and downs of the index can be attribute mostly to the changes in gasoline prices, not changes in consumer views about the dollar threshold for serious pain at the pump.

In contrast to the story for gasoline, the home energy affordability index remains a model of consistency. The January 2017 value increased by a modest 3 points to 119, just below its average since October 2013 of 124. As seen in the chart below, this measure of how affordable consumers think their home energy bills are has rarely deviated from this average, now based on 14 quarters of U-M Energy Survey data.

Note that the error bars are much wider for home energy than they are for gasoline, which reflects how consumer responses about the affordability of home energy are much more variable than they are for gasoline. We suspect that this statistical “squishiness” of views on home energy costs may have something to do with consumers not having as clear an idea of what they pay for home energy as they do for the price of gasoline. The latter is, after all, highly visible and something most Americans get to look at weekly, which is about how often motorists have to fill their tanks. In contrast, home energy is billed monthly. Also, more and more consumers are on an auto-pay plan, and so may not have a very precise recollection of their electric and other home energy bills when we ask about them during the survey.